in Chapter 16 - investment management, part 3 - risk budgeting, and part 4 - portfolio construction, actually, the content seems highly similar, that,
1) risk budgeting: there are two parts, one is allocating overall risk into strategic risk and active risk, and the other is allocating the total active risk across portfolios.
2) portfolio construction: this involves a two-stage process, the first one is seting a strategic benchmark by which to measure straegic risk, the second one is selecting managers to allcoate the active risk.
Is my understanding correct? on that case, is there difference between the two topics? i.e. risk budgeting for investment strategy and investment portfolio construction.
1) risk budgeting: there are two parts, one is allocating overall risk into strategic risk and active risk, and the other is allocating the total active risk across portfolios.
2) portfolio construction: this involves a two-stage process, the first one is seting a strategic benchmark by which to measure straegic risk, the second one is selecting managers to allcoate the active risk.
Is my understanding correct? on that case, is there difference between the two topics? i.e. risk budgeting for investment strategy and investment portfolio construction.